9911796707
TMI Blog2018 (9) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... essee maintains proper books of accounts and the same were subjected to audit by chartered accountants. The assessee filed its return of income for the Asst Year 2010-11 on 19.9.2010 declaring total income of Rs. 77,22,550/-. There was a search and seizure operation conducted u/s 132 of the Act at the registered office of the assessee company on 15.12.2015 at 1st and 2nd floor, 13B, Digambar Jain Temple Road, Chinipatty, Kolkata - 7. Consequent to the search, notice u/s 153A of the Act was issued on 9.9.2016 and served upon the assessee on 14.9.2016 seeking return for the Asst Year 2010-11. In response to the said notice, the assessee filed its return of income declaring total income of Rs. 77,22,547/- vide e- filing acknowledgement No. 489177871101016 on 10.10.2016.. The assessee stated that the time limit for issuance of notice u/s 143(2) of the Act for the Asst Year 2010-11 in respect of the original return filed on 19.9.2010 had expired on 30.9.2011 and hence as on the date of search, the year under consideration (i.e Asst Year 2010-11) would fall under the category of unabated assessment and hence the income ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the details with regard to the share capital and yet on the basis of post search deposition taken by the ADIT (Inv.) from certain entry operators, the ld AO added back the said amount of Rs. 3,75,00,000/- as unexplained cash credit u/s 68 of the Act. The assessee before the ld CITA stated tht in support of the receipt of share capital, the assessee had provided name & address of the share applicants, PAN of the share applicants, conformation letters from the share applicants, their ITR acknowledgement, copy of profit and loss account and balance sheet, source of the funds provided, bank statement, ROC documents etc. With regard to justification for premium, the assessee company stated that it owns the brand 'Anu Sarees' , one of the major seller of cotton printed sarees in Eastern India. This is a well established branch and assessee holds goodwill in entire Eastern India . The company is also regularly increasing its turnover and consistent increased net profits. Due to its inherent goodwill , the assessee was able to raise share capital with premium. The assessee also gave the information regarding the changed name of the shareholders together with the latest addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of search with regard to the issue of share capital, share application money and share premium, the ld DR argued that the expression 'incriminating material' is not found in the provisions of the Act and it is only the Hon'ble Courts which had imported those words while rendering the decisions. He stated that the Hon'ble Courts are divided on this issue and placed reliance on the decision of the Hon'ble Karnataka High Court in the case of Canara Housing Development Co vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) wherein it was held that search assessments could be framed even without the existence of incriminating materials found in the course of search. He argued that the basic foundation for conducting the search is governed by the provisions of section 132 of the Act which has to be read harmoniously with section 153A of the Act. There are three conditions based on which a search action could be initiated u/s 132 of the Act on an assessee. They are :- Section 132(1) - If the concerned authority has in consequence of information in his possession, has reason to believe that - (a) where a person fails to produce the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s 143(1) of the Act and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding , as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience :- "[Assessment in case of search or requisition 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is found during the course of search with respect to the relevant assessment year. (d) Pursuant to the search u/s. 132 of the Act, the pending proceedings would get abated. In respect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be - (i) assessment years where assessments are already completed u/s. 143(1) and time limit for issuance of notice u/s. 143(2) of the Act has expired or; (ii) assessment years where assessments are already completed u/s. 143(3) of the Act ; unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, or other post-search material or information available with the LD AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the LD AO. (vii) Completed assessments can be interfered with by the LD AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon'ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon'ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 8.6. We also find that the Hon'ble Jurisdictional High Court recently in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case and also placed reliance on its own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC). 8.7. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
